Bai Muajjal may be defined as sale under which the price of the item involved is payable on a deferred basis either in lump sum or in instalments. This system could be of considerable use in financing current input requirements of industry and agriculture as well as in the financing of domestic and import trade

Key Features:

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Equipment or goods requested by the client are bought by the bank, which subsequently sells the goods to the client for an agreed price, including a mark-up (profit) for the bank.

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The client may pay by installments within a pre-agreed period, or in a lump sum.

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This sale works in a similar way to a Murabahah contract, but with deferred payment.

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Permissible to obtain mortgage / or personal guarantee from a third party before or at the time of signing the agreement.

Diference between Murabaha and Bai-Muazzal:

Murabaha

Bai-Muazzal

1

Bank sell it at a higher price an spot payment or as any future date.

1

Bank sell it at a higher price but payment will be deffered.

2

Bank must bear the risk until delivery of goods to the client.

2

Client bear the risk of goods as the Possession of goods are in party control.

3

Possession of goods under bank’s control.

3

Possession of goods under party’s control.

4

Cost of the goods sold and the amount of profit should be mentioned in the Murabha Agreement.

4

In Bai-Muazzal mode any selling price of goods should be mentioned in the Bai-Muazzal agreement.